Shareholder's derivative litigation between brother and sister candy manufacturing magnates Hank and Virginia Whetstone is pending in Circuit Court, involving control of the Whetstone family chocolate company. The lawsuit was filed January 28, 2015 and has not been covered in The St. Augustine Record, Jacksonville Business Journal, or elsewhere.
Virginia Whetstone's litigation documents allege under oath that her brother, former St. Augustine City Commissioner Henry Whetstone, Jr. a/k/a "Hank Whetstone" and two of the Whetstone Chocolate businesses allegedly committed fraud and self-dealing, gross mismanagement, conversion, tortious interference with contractual relations and breached their fiduciary duty to stockholders Virginia Whetstone and her husband Bruce Maguire.
Virginia Whetstone and Bruce Maguire are asking for appointment of a receiver and unspecified "substantial damages." After the suit was filed, Virginia Whetstone and Bruce Maguire lawyers obtained thousands of pages of documents in discovery and they then amended their complaint, making new sworn allegations supported by bank and corporate records.
The parties agreed to a temporary injunction signed by Judge Howard Maltz on September 22, 2015, to be in effect pending litigation, while the Court considers a request for appointment of a receiver, barring Hank Whetstone, et al. from altering or selling the manufacturing agreement with Yowie North America, Inc. for patent licensing and manufacturing at Whetstone Place in St. Augustine.
In the amended lawsuit complaint, Hank Whetstone and those acting in concert with him are accused of illegally firing his sister Virginia during her recent illness [cancer][that's cold, Hank, and might violate the Americans with Disabilities Act], Hank Whetstone's illegally failing to pay his required contribution to buy the new chocolate factory building on King Street (a former tire dealership), Hank Whetstone's creating a new company to receive income from Whetstone's patents, Hank Whetstone's negotiating to sell Whetstone business assets.
In Hank Whetstone's answer to the amended verified (sworn) complaint, lawyers for Hank Whetstone deny most of the allegations in some 413 paragraphs, dodges others and admits some.
Hank Whetstone's "affirmative defenses" claim that Virginia Whetstone breached her contractual obligation to conduct tours and sell candy at the 139 King Street location or conduct tours at 149 King Street, failed to produce chocolates at the 149 King Street location, misused corporate assets such as the deposit for purchase of 139 King Street and manufacturing assets at 149 King Street for her "own personal benefit" and thus has "unclean hands" (a defense in equity law) and is barred by the "business judgment rule" in corporate law.
There are three sets of Jacksonville lawyers in the case and there might still be more.
Virginia Whetstone and husband Bruce Maguire and Whetstone Chocolate Factory, Inc. are represented by Niells Murphy
Hank Whetstone is represented by William David Talbert.
Frank DiMare and Atlantic Candy f/k/a Whetstone Industries, Inc. and Whetstone Industrial Holdings, Inc., are represented by Charles Walker McBurney, Jr. McBurney is a Florida state representative and has used his right to stay litigation to to delay proceedings while the legislature is in session. In response, counsel for Virginia Whetstone and Bruce Maguire filed as to Frank DiMare a voluntary nonsuit without prejudice (meaning it can be refiled). In response, McBurney also now represents Atlantic Candy Company f/k/a Whetstone Industries, Inc. and Whetstone Industrial Holdings, Inc., controlled by Hank Whetstone.
There are some rather shocking internecine business torts, even for St. Augustine and Florida. Virginia and Hank Whetstone, brother and sister, are Vanderbilt University graduates and sophisticated, if sharp, local businessmen. Virginia Whetstone's Vanderbilt undergraduate degree is in business; Hank Whetstone's degree is in economics. Hank Whetstone invented several candy-making devices and holds patents.
The suit is pending before Circuit Court Judge Howard Maltz, with some documents under seal to protect privacy or confidential corporate data (including Hank Whetstone's sworn deposition testimony). There are dozens of lengthy detailed filings on the complaint and defenses on the website of the St. Johns County Clerk of Courts. To read more, you can click on any of the available documents for case number CA15-0100, and the documents will be made available to you later on that same website by the Clerk.
No indication as to when or whether the company's founders, Henry M. Whetstone, Sr. and his wife Esther, will hire lawyers and take a position on the lawsuit between their offspring, Virginia and Hank Whetstone. Thus far, no media organization has asked for unsealing of the deposition of Hank Whetstone and other documents, agreed to by the parties and ordered by the Court.
Speaking of which, the pendency of such a major lawsuit for nearly nine months without any news coverage speaks volumes of the lack of newspaper journalism in St. Augustine and St. Johns County. If' it's a wreck or it bleeds, it leads in The St. Augustine Record.
If it's a civil case, it's not covered at all, ever, unless some PR agent wants it covered.
If it's a criminal case, it's covered if the Sheriff and the State's Attorney want it covered.
If it's a fatal shooting of a deputy's girlfriend in the deputy's home, it got short shrift, no names ab initio, and the Sheriff's spin ("suicide") until The New York Times and PBS Frontline walk in several years later (and then got mocked as "parachuting in" to St. Johns County by since-fired Director of Audience/Editor Kathy Nelson, who suffered from delusions of adequacy).
Plaintiff Virginia Whetstone, September 1, 2015, w/ Florida Governor Richard Lynn Scott and Cabinet, receiving Governor's Business Award (HCN)
Defendant Hank Whetstone (Henry M. Whetstone, Jr.)
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